Technically Mentha Oil market is under long liquidation as market has witnessed drop in open interest by 2.83% to settled at 480 while prices down 11.4 rupees.
Now MCX Mentha Oil is getting support at 1150.4 and below same could see a test of 1139.4 levels, and resistance is now likely to be seen at 1180.7, a move above could see prices testing 1200.
Mentha Oil yesterday settled down by 0.97% at 1161.3 dropped on profit booking after prices gained sharply while last week prices dropped triggered by the coronavirus outbreak in China may have been overdone.
Some are betting the economic impact of the epidemic will be brief and damage to metals demand will be offset by supply disruption caused by efforts to contain the spread of the virus. Ever since the corona virus attack, new consumption of Indian mentha oil and menthol products is not coming out in China.
Exports were already affected by this, but now its impact has reached the retail market. Mentha-producing farmers are also affected by this. Market prices have broken up to Rs 100 per kg since Jan 2020. Mentha and menthol products from Sambhal have an annual export of Rs.3000–3500 crores. China's consumption in it is Rs 1500-2000 crore annually. Meanwhile pressure also seen as Synthetic mentha oil produced in Germany is cheaper in price than natural mentha oil.
Mentha crop is likely to rise in 2020-21 on expectations of the sowing area to increase for the new season. In recent years, besides traditional growers of UP, farmers in Madhya Pradesh have also started cultivating mentha crops due to better returns. Market sources expect acreage in the state to increase further. Although prices have fallen substantially, traditional growers of UP would stick with mentha cultivation, as returns from the mint crop is almost double the cost of production.
--Mentha Oil trading range for the day is 1139.4-1200.
--Mentha Oil spot at Sambhal closed below 1200 level as demand concerns.
--Mentha Oil dropped again on profit booking after prices rallied on monday's session.
--Ever since the corona virus attack, new consumption of Indian mentha oil is not coming out in China.
--Synthetic mentha is cheaper in price than natural mentha oil.
Courtesy: Kedia Commodities